So, you are looking to house hack your first home. This is where you buy a property that you can both live in and establish rental income under the same roof (whether it be renting a room or a second unit). I am on my second house hack and have clients who have been doing it for years.
But you want to get started on your first place and you live in an expensive area such as Los Angeles. What should you be looking for? Where should you be getting started?
Here are some initial tips to consider:
- Determine how much you would be willing to pay after you factor in all expenses and the potential rental income. My recommendation is to try to match what you are paying now. This is because as rents continue to go up, your portion shrinks. Plus, this doesn’t factor in the tax savings that you get at the end of the year that you didn’t have before.
- Determine the lifestyle you are willing to have. Just because you buy a four-bedroom house doesn’t mean you have to rent out all three. Maybe you want one as an office. If that is the case, then factor that into your numbers.
- Put together a list of potential roommates and be realistic on what you can charge for rent. When I got my first roommate, I wanted someone I could trust. So not only did I reach out to the first person I thought of, but I included the utilities and twice a month maid service to sweeten the deal. It made life easier for both of us, and the numbers still made sense for me.
- In an idea world, get at least 2 bathrooms. This way it makes sharing the space more tolerable and later on, will make for a better rental.
This is a great start to getting into house hacking. In areas such as Los Angeles, this may be the only way for many to get ahead. After all, if you are renting now with roommates, what’s the difference?
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